Fri
SEP 21 18 SIT EC y POL
ND denounce Global-neoliberal debacle y propone State-Social
+ Capit-compet in Econ
“Everything the U.S. does hasn’t given any impression of sincerity and
goodwill...We hope that the U.S. side
will take measures to correct its mistakes.”
….
ZERO HEDGE ECONOMICS
Neoliberal globalization is over. Financiers know it, they
documented with graphics
TARIFF-TANTRUM,
WALMART-WARNING, & DOLLAR-DUMP SPARK GLOBAL STOCK-BUYING PANIC (EXCEPT US
TECH)
AUN NUESTRO TITATIC FLOTA.. that is a good news
Seriously...
Chinese
stocks soared higher this week (SHCOMP +4.3%) - the best week since March
2016...
See Chart:
While
China surged in two major National Team pumps, Europe was a one-way-street of stock-love all week...
See Chart:
But US
markets were a little more mixed with The Dow leading, S&P holding gains,
and Nasdaq, Small Caps, & Trannies all red...
It was
quad-witch today, and a massive index reclassification, which prompted yuuge
volume in stocks...the biggest NYSE Volume Day since July 2010...
See Chart:
On the
day, The Dow trod water rather too calmly as the rest of the market rolled
over...and some serious moves into the close.
Nasdaq
broke back below 8,000...
Dow (blue)
leads the way in September (+3%) as Small Caps (red) and Nasdaq (green) remain
in the red...
FANG
Stocks ended lower on the week
See Chart:
New
industries are born and it is not a bubble
The yield
curve steepened on the week (but was well off its steepest levels by the
close)...
See Chart:
Notably
after Tuesday's major surge in yields - back above 3.00%, 10Y Yields have
largely trod water in a very narrow range...
See Chart:
The Dollar Index fell for the second straight week - the
biggest two-week drop since January...
See Chart:
And as the
Argentine Peso soared, Cable was even worse on the day than the Turkish Lira...
See Graph
The Hong
Kong dollar jumped by the most since October 2003 this
week, with analysts citing the prospect of higher rates in the city and
stop losses as possible triggers.
Finally,
we note that U.S.
stock valuations are increasingly in a world of their own...
The gap
between these indicators widened in the 12 months ended Thursday by 20 percent,
more than it has in any calendar year since 1997, according to data
compiled by Bloomberg.
And as
stocks hit record highs in price and valuations, @ETF.com reports that a
massive $34 bn poured into ETFs this week...
See Table:
....
….
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Discretionary spending: spending
which a Govt body is entitled to do but not legally required to undertake. (IT
is at the discretion of the Pres if Law doesn’t exist). It includes both
spending in real goods & services such as public works & grants to
individuals & Orgts. This
article focus on the spending in military affairs since 1963 until today (See animated Video). Discretionary
Spend is contrasted with “mandatory spending programs”where certain forms of spending
is regulated by law or by rules of governing schemes like pensions or
disability benefits.
...after
adjusting for inflation (using 2009 dollars), discretionary spending has doubled since
1963.
See Video:
DISCRETIONARY
SPENDING OVER TIME in animated Video.. at the source below
THE U.S.
BUDGET is generally divided into
three main categories:
Discretionary Spending: This category,
depicted in the animation, is the optional part of the budgetary equation –
it’s the aspect that most people talk about, as the allocation of funding
towards different things like defense, education, and transportation can be
changed by lawmakers.
Mandatory Spending: Also known
as entitlement spending, this category includes funding for programs such as
Social Security, Medicare, and Medicaid. It’s called mandatory spending because
the government legally is committed to fulfilling these obligations, and it
exists outside of the normal budget appropriations process.
Net Interest: This category is
for payments on the national debt, also something that is necessary unless the
country is willing to default on these obligations.
DISCRETIONARY
SPENDING TODAY
As the animation
shows, after adjusting for inflation (using 2009 dollars), discretionary spending has doubled since 1963.
In 1963, which was
essentially the height of the Cold War, the U.S. was spending 73% on the
military to make up the vast majority of the $547 billion (2009 dollars) in
discretionary spending.
Meanwhile, in Fiscal
Year 2019, the government has allocated $1.3 trillion (today’s dollars) to the
budget:
SEE CHART:
Things haven’t
changed much since 1963 in that defense still comprises the majority of
spending – in fact, the only recent time periods where
U.S. defense spending fell below 50% were roughly between 1977-1981 and
1999-2004.
American spending on
defense dwarfs
all other countries, but there are other categories that make up decent
chunks of the discretionary budget as well.
While they seem
small on the above chart, transportation (7%),
education (7%), and veteran benefits (6%) are all actually categories that
receive over $70 billion of annual funding – still a significant piece of
change.
….
[[ Notice: If we add the Veteran benefits 7% , to the
military spending –as happens before—we have more than 57% in military spending
. Check how much we spend during WW2 .. Are we at war again? When this last war
was legally declared? If never.. who decided? .. The Military-Ind-Compl.. who
give them power to do so?.. Are we a democratic country or a neo-nazi one? ]]
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"We are still living in
the destabilized, debt-ridden aftermath of such pro-bank advocacy...Something
has to give, and it isnot likely to be
the savings of the donor class at the top of the economic
pyramid..."
Today’s
financial malaise for pension funds, state and local budgets and
underemployment is largely a result of the 2008 bailout, not the crash. What was saved was not only the banks – or more
to the point, as Sheila Bair pointed out, their bondholders – but the financial
overhead that continues to burden today’s economy.
Also saved was the idea that the economy needs to keep the
financial sector solvent by an exponential growth of new debt – and, when that
does not suffice, by government purchase of stocks and bonds to support the
balance sheets of the wealthiest layer of society. The internal contradiction in this policy
is that debt deflation has become so overbearing and dysfunctional that it
prevents the economy from growing and carrying its debt burden.
Trying to save the financial overgrowth of debt service by
borrowing one’s way out of debt, or by monetary Quantitative Easing
re-inflating real estate, stock and bond prices, enables the creditor One Percent to gain, not the
indebted 99 Percent in the economy at large.
Read more extracts from this article:
A basic principle should be the
starting point of any macro analysis: The volume of interest-bearing debt tends to outstrip the economy’s
ability to pay. This tendency is inherent in the “magic of
compound interest.” The exponential growth of debt expands by its own purely
mathematical momentum, independently of the economy’s ability to pay – and
faster than the non-financial economy grows.
The higher
the debt/income ratio rises, the more interest, amortization payments and late
fees are extracted from the economy. The
resulting debt burden slows the economy, causing defaults. That is what
happened in 2008, and is accelerating today as debt ratios are rising for
corporate debt, state and local debt, and student debt.
…
Something
has to give, and it is not likely to be the savings of the donor class at the
top of the economic pyramid. As
a result, the economy at large is threatened with an exponentially expanding
erosion of disposable income and net worth for most people and companies.
Investment managers are warning of a financial meltdown, given today’s
historically high price/earnings ratios for stocks and also for rental
properties.
What is
not acknowledged is that such a crisis is a precondition for today’s economy to
recover from the rising debt/income and debt/GDP ratios that are burdening the
United States, Europe and other regions. At least the United States
has been able to monetize its budget deficits and subsidize banks to carry its
rising debt overhead with yet new debt.
….
None of this was spelled out in the September 15 weekend
marking the tenth anniversary of Lehman Brothers’ failure and subsequent rescue
of Wall Street. President
Obama, Treasury Secretary Tim Geithner and their fellow financial lobbyists at
the Federal Reserve and Justice Department are credited with saving “the
economy,” as if their donor class on Wall Street was a good proxy for the
economy at large. “Saving the economy from a meltdown” has become
the euphemism for saving bondholders and other members of the One Percent from
taking losses on their bad loans. The “rescue” is
Orwellian doublespeak for expropriating over nine million indebted Americans
from their homes, while leaving surviving homeowners saddled with enormous
bubble-mortgage payments to the FIRE sector’s owners.
….
What has been put in place is not a restoration of traditional
status quo, but a reversal of over a century of central bank policy. Failed banks have not been taken
into the public domain. They have been enriched far beyond their former levels.
The perpetrators of the collapse
have been rewarded, not penalized for lending more than could possibly be paid
by NINJA borrowers and speculators whose mortgage
applications were doctored by systemic fraud at Countrywide, Washington Mutual,
Bank of America, Citigroup and their cohorts.
The $4.3 trillion that could have been used to save debtors
was given to the banks and Wall Street firms whose recklessness and outright
fraud caused the crisis. The Federal Reserve “cash for trash” swaps with
insolvent banks did not restore normalcy or the status quo ante.
What occurred was a financial revolution by stealth, reversing the traditional
responsibility of creditors to make prudent loans.
Quantitative
Easing saved creditors and the largest stockholders and bondholders by lowering
the interest rates by enough to make it profitable for new loans to inflate
asset prices on credit
….
Among Democrats, the
most extreme tunnel vision denying that debt is a problem comes from Paul Krugman:
Writing
that “The purely financial aspect of the crisis was basically over by
the summer of 2009, ”he criticized what he called the “bizarre Beltway
consensus that despite high unemployment and record low interest rates, debt,
not jobs, was the real problem.”
This
misses the point that 2009 was the real beginning for most of the nine million
homeowners being foreclosed on and evicted from their homes…. We are still living in the destabilized, debt-ridden
aftermath of such pro-bank advocacy.
Can a bailout
without debt write-downs really bring prosperity? Can economies achieve growth
by “borrowing their way out of debt,” by creating enough new credit to cover
the interest charges out of capital gains from the asset-price inflation fueled
by new bank credit. That is the logic that has
guided the Federal Reserve’s net $4.3 trillion in Quantitative Easing, and the
parallel credit creation by the European Central Bank under Mario “Whatever it
takes” Draghi.
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The key financial principle is that this self-expansion of
interest-bearing debt grows to absorb more and more of the economic surplus.
The solution therefore must involve wiping out the excess debt – and savings
that have been badly lent. That is what crashes are supposed to do. It was not
done in 2008. That is why the status quo was not restored. A vast giveaway to
the financial elites occurred, setting the rest of the economy on a road to
debt peonage.
- It would have been nice to have read an article by Sheila Bair explaining the procedures that the FDIC had in place, ready to take over insolvent Citigroup and other banks in similar straits, saving all the insured depositors by taking over these institutions. No doubt as public institutions they would not have indulged in junk mortgages or, for that matter, takeover loans.
- It would have been nice to hear from Hank Paulson and perhaps Barney Frank on how they tried to get incoming President Obama to write down bad mortgages whose carrying charges were as far above the debtor’s ability to pay as they were above the going rental value for similar properties.
- It would have been nice to hear a mea culpa from Mr. Obama apologizing for representing the interest of his campaign donors by standing between them and his voters with pitchforks. Even an article by Tim Geithner or Eric Holder on how lucky they felt at getting such high-paying jobs after they left office from the financial sector they had overseen and “regulated.”
….
What is
needed now is to follow up the primary policy perception that today’s
financially dysfunctional economy cannot be saved without a
bank crash. That means
rolling back the enormous gains that the FIRE sector has made since 1980 at the
expense of the “real” economy. Banks have
ceased to be an “engine of growth.” They are not making loans to create new
means of production. They are lending to asset strippers, not asset creators.
…
At stake
is whether the U.S. and Western European economies are going to end up looking
like those of Greece, Latvia and Argentina – or imperial Rome for that matter. Neoliberals applaud today’s victorious
finance capitalism as the “end of history.” One such end has already occurred
once, at the close of Roman antiquity. It is remembered as the Dark Age.
Progress stopped as the creditor and landowning class lorded it over the rest
of society. Trade survived only among the lords at the top of the economic pyramid. Today’s “End of History” dream threatens to unfold along
similar lines. It is all about relative power of the One Percent.
…
…
SOURCE: https://www.zerohedge.com/news/2018-09-21/wasting-lehman-crisis-what-was-not-saved-was-economy
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As one would expect, pay/salary was at the top of the list across all
respondents but what followed varied by generation and gender, with some
surprising shifts.
The US labor market
has recently been faced with two distinct and opposing trends.
See Chart:
Job
opening vs. People Unemployed
However,
for Millennials and Generation X, it was less clear cut. While traditional benefits still
ranked high on their lists, younger workers reported
greater importance of other non-monetary "lifestyle" benefits such
as flexible hours and workplace perks (e.g. free meals/snacks,
bring pets to work). Meanwhile, of all factors, Millennials
put surprisingly low weight on retirement benefits while healthcare benefits
was on par with flexible hours.
See Chart:
Broken by gender, the survey
revealed that women placed greater importance to healthcare benefits and
flexible hours while men put more emphasis on workplace perks and company
equity.
See Chart:
The results support the view that a shift in
preference by younger generation for greater nonmonetary compensation is one of
the many explanations for the slow pace of wage growth this cycle.
The survey also asked respondents about their views on labor
market conditions. Consistent with other consumer surveys, the US worker
generally was feeling good about their job prospects. The share of respondents
reporting it is easier to find or switch a job increased in August compared to
when we asked in May with Baby Boomers showing the greatest improvement.
See Chart:
See more charts at:
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“It’s all fun and games until
someone gets their eye put out....”
An interesting thing has begun to occur in the market which
is more a symptom of exuberance than prudence as there seems to be nothing that
can derail the market advance to new highs. However, as Doug Kass noted
recently in his diary, the ingredients to shock market participants are already
in place.
- Speculative activity is on the rise (materially so in the case of Tilray (TLRY) and others in the space).
- Investor complacency (not a soul, save permabears, are looking for anything like a large markdown in market).
- Rising interest rates — with the pace of the yield climb now accelerating to the upside.
- Trade and tariff risk is rising.
- An extreme change in the market structure — much like portfolio insurance in 1987, (ETF and Quant strategies and products dominate the market) — in which participants are all on the same side (long) of the boat.
- Social unrest as the benefits of monetary and fiscal policies failed to trickle down.
- Weak market seasonals.
- Technical divergences.
The market is currently ignoring,
in my opinion, two of the biggest risks to the fundamental
underpinnings of the market which are earnings growth and valuation. [
Where are they?]
The following video takes a deep
dive into rates and historical outcomes.
See Video
But this is THE chart you should be
paying attention to:
See Chart:
There are several important points to note in the chart
above:
- In the past 40-years, there have only been seven (7) other occasions where rates were this overbought. In each case, it was a great time to buy bonds and sell stocks. (When rates got oversold, it was time sell bonds and buy stocks.)
- There were only two (2) other periods where rates were this extended above their long-term moving averages. The one that occurred between 1980-1982 began the long-term decline in bond prices.
- Economic growth has peaked every time rates got this extended. (Which shouldn’t be a surprise.)
- Whenever rates have previously pushed 2-standard deviations of their 2-year moving average – bad things have tended to occur such as the Crash of 1974, Crash of 1987, Long-Term Capital Management, Russian Debt Default, Asian Contagion, Dot.com crash, and the Financial Crisis.
While the markets are currently ignoring the risk of higher
rates, even a cursory glance at the chart above suggests that we are near the
point where “rates
will matter.”
I suspect the “Magic Number” is
likely no higher than 3.25%.
But we will only know for sure when the “rabbit pops out of the hat.”
Meanwhile check your weekend reading
list.
Economy,
2008 & Fed
- Fed Officials Are Playing With Fire by Caroline Baum via MarketWatch
- Burying Our Heads In The Sand by Hunt Lawrence via American Spectator
- Further Tax Cuts, Further Fiscal Irresponsibility by Committee For A Responsible Federal Budget
- Tax Reform Promised A Deluge, We Got A Drip by Omri Marian via The HIll
- Trade War Escalates – Markets Shrug by Matt Phillips via NYT
- 6-Signs We’re Closer To A Recession Than You Think by Sean Williams via Motley Fool
- Wages Are Low And Workers Are Scarce by Annie Lowrey via The Atlantic
- The Casualties Of The Trump’s Trade War by Steve Chapman via Reason.com
- Economic Bump Due To Stimulus by James Macintosh via The New Yorker
- Can American Be A Successful Low-Tax Society by Grover Norquist via Ozy
- Who Really Creates Value In An Economy by Mariana Mazzucato via Project Syndicate
- A Decade Later, Is The Global System Safer by Knowledge@Wharton
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Markets
- Edwards: Next Recession Only 6-Months Away by Tyler Durden via Zerohedge
- This Market Indicator Most Inflated Since 2000 by Mark Hulbert via MarketWatch
- TSLA: Headed To The Graveyard by Shawn Langlois via MarketWatch
- A Warning From Europe by Anne Applebaum via The Atlantic
- It’s A Nightmare Scenario For The Markets by Wolf Richter via Wolf Street
- The “Junkie Market” Is Back Again by Dana Lyons via The Lyons Share
- Central Banks On Gold Buying Spree by Simon Constable via Forbes
- Emerging Pieces From The EM Decline by Seth Levine via The Integrating Investor
- Markets Don’t Care About Trade Wars by Ryan Vlastelica via MarketWatch
- When Is The Next Recession & Bear Market by Jesse Colombo via Forbes
- The End Of The Incessant Bid by Kevin Muir via The Macro Tourist
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Most
Read On RIA
- The World Diverges From The U.S. by Lance Roberts
- Buffett: A Walking Contradiction by Michael Lebowitz
- The Ingredients Of An “Event” by Lance Roberts
- 80% Of Americans Face A Retirement Crisis by Lance Roberts
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Research /
Interesting Reads
- The Confidence Game Being Run At Salesforce by Ben Hunt via Epsilon Theory
- 2/3rds Of Americans Believe The Stock Market Hasn’t Risen by Tyler Durden via ZeroHedge
- A Decade Later: How The Recession Changed Everything by Liz Wolfe via Playboy
- How The Next Downturn Will Surprise Us by Ruchir Sharma via NYT
- 5-G Will Change Everything by Gary Shapiro via Real Clear Markets
- Statistics Say The Financial Crisis Is Behind Us, They’re Wrong by David Leonhardt via NYT
- The Biggest Economic Change In A Decade by John Stepek via MoneyWeek
- Is The Stock Market Overvalued? by Knowledge@Wharton
- Retirement Is In Peril For Most Americans by Ted Knutson via Forbes
- Fed Should Go Lower For Longer by Janet Yellen via Brookings
- The Will Be The Mother Of All Minsky Moments by John Mauldin via Mauldin Economics
- What We Should Have Learned From 2008, But Didn’t by Carmen Reinhart via Foreign Affairs
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US
DOMESTIC POLITICS
Seudo democ duopolico in US is obsolete; it’s full of frauds
& corruption. Urge cambio
"The elites and the media are trying
to convince you that this inexpiable leaving of the factories and jobs is
but a law of physics. The opposite is actually true – it is the human action
which did it. It can be reversed and it will be reversed."
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Here’s something you don’t see
every day:Chicago’s
progressive Readeraligned
with conservative Breitbart. Both had articles Wednesday slamming the Obama Center to be built in
Chicago’s Jackson Park.
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US-WW ISSUES (Geo Econ, Geo Pol
& global Wars)
Global depression is on…China, RU, Iran search for State
socialis+K-, D rest in limbo
3 short news with
big content
1-
“Everything the U.S. does hasn’t given any impression of sincerity and
goodwill...We hope that the U.S. side
will take measures to correct its mistakes.”
----
2-
Most investors are unaware that
these peak panic moments (Sept. 28, 1998 and Sept. 15, 2008) had actually
been playing out for over 15 months in both cases. Investors who closely
observed the early signs of troublehad ample time to get out of the
way of the panic itself...
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3-
"Eventually this mess is going to spill
into the US markets... When it does, the bursting of the Everything
Bubble will have officially hit US shores."
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SPUTNIK and RT SHOWS
GEO-POL n GEO-ECO
..Focus on neoliberal expansion via wars & danger of WW3
Listen
Video: https://youtu.be/HRpWXMfTzaI
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RT SHOWS
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NOTICIAS IN SPANISH
Lat Am search f alternatives to neo-fascist regimes &
terrorist imperial chaos
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INFORMATION CLEARING HOUSE
Deep on the US political crisis: neofascism & internal
conflicts that favor WW3
Pompeo Overruled State Department Experts to
Back U.S. Military Support of Saudis in Yemen
By Dion Nissenbaum Continue
By Dion Nissenbaum Continue
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GLOBAL RESEARCH
Geopolitics & Econ-Pol crisis that leads to more
business-wars from US-NATO allies
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Department
of Health and Human Services Lost Track of Another 1,500 Immigrant Children By World
Socialist Web Site,
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PRESS TV
Resume of Global News described by Iranian observers..
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